DOL QPAM Proposal: ABA Testimony at DOL Public Hearing

Members of the panel, my name is Tim Keehan. I am Vice President and Senior Counsel for the American Bankers Association. ABA is the voice of the nation’s $23.7 trillion banking industry. Its membership is comprised of small, regional, and large banks that together employ more than 2 million people, safeguard $19.6 trillion in deposits, and extend $11.8 trillion in loans. ABA appreciates the opportunity to be here regarding the Department of Labor’s proposed amendments to Prohibited Transaction Class Exemption 84-14, commonly referred to as the QPAM Exemption.

Rather than covering the substance of the Proposal, my testimony today instead will focus on the regulatory process leading up to the Proposal’s release. Specifically, I will address: first, the directives on regulatory rulemaking expressly affirmed by this Administration through Executive Order; second, guidance on regulatory analysis provided by the Office of Management and Budget to federal agencies; third, the Department of Labor’s perilous deviation from the rulemaking process as laid out by Executive Order and OMB guidance, which has resulted in at least one critical error in the Department’s drafting and projected cost of the Proposal; and finally, recommendations that would remediate the Department’s actions and preserve a rulemaking process that is consistent with federal regulatory standards and guidance.

At the outset, ABA notes that since its issuance nearly four decades ago, the QPAM Exemption has functioned well and exactly as intended. The Exemption has become a core market practice of the retirement services industry across the spectrum of financial lines of business and products. The QPAM Exemption’s guardrails ensure proper use of the Exemption, and provide the Department with full authority to supervise its implementation and to sanction improper conduct – including, where necessary – QPAM disqualification. While we acknowledge the Department’s regulatory authority to revise the Exemption, we also understand that the Department must abide by the regulatory rulemaking process as laid out by White House directives and OMB guidance.

Specifically, in the January 2021 Memorandum, Modernizing Regulatory Review, President Biden reaffirmed the basic principles of the federal regulatory process as set forth in Executive Order 13563 (on improving regulations and regulatory review). Executive Order 13563, among other things, states that “[b]efore issuing a notice of proposed rulemaking, each agency, where {P0140724.1} feasible and appropriate, shall seek the views of those who are likely to be affected, including those who are potentially subject to such rulemaking.

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